Inflation shock leaves markets fearing three interest rate rises this year

La_Contessa

I am not interested in your insults... what exactly is the problem that you have with me,

I am not a dumbhead nor a debt junkie as you seem to have suggested in another post

I have no interest in you nor your comments, move on... I have a right to express my opinion too and unlike yourself don't go round pulling others down

tradetime

they insist that the interest rate will fall again, as the Bank of E. is under pressure due to the pressure on consumers.

The BOE's mandate is to fight inflation, same as the ECB's (they call it "Maintaning price stability") Thus the BOE cannot very well cut interest rates in the face of rising inflation, Even the FOMC (that's the US central bank) are switching their attention to inflation and indicating that they have stopped cutting, and their primary mandate is economic growth.
This sort of jawboning by the Nationwide et al is simply an attempt to put pressure on the BOE by raising peoples expectations of a cut.
Anybody who owns a house with a comfortable mortgage which is well within their means, and low or no other debt, and good job security (accepting that nothing is bulletproof) has little to worry about, but that has no bearing on the BOE's job.

aurorahelios

La_Contessa wrote: »

I have a right to express my opinion too and unlike yourself don't go round pulling others down

But it's not your opinion is it:rolleyes:, you are quoting the Nationwide who have consistently failed to estimate the downturn in the housing market and have a vested interest in talking it up.

mystic_trev

La_Contessa wrote: »

just out of interest, I just checked Nationwide's website and an article they have put together, and they insist that the interest rate will fall again, as the Bank of E. is under pressure due to the pressure on consumers.

As others have pointed out, the BofE's remit is to control inflation. The European central Bank said last week that they expected their IR's to be on the increase in the near future. This means our IR's will not be going down in the near future and probably up. Add to that the fact that swap rates have been increasing, expect mortgage rates of 7% plus soon! Anyone who's overgeared on Property is going to get well and truly stuffed.

ManAtHome

tradetime wrote: »

Thus the BOE cannot very well cut interest rates in the face of rising inflation,

The last 3 cuts were whilst inflation was rising - IMHO main reason why the commercial banks said "sod this for a game of soldiers" and banged their rates and fees up. BoE rates now a side-show, only influencing the value of the quid, and there may just be the odd lighbulb flickering a bit that maybe a weak pound doesn't help with either the Balance of Payments or inflation (or pretty much anything else really).

Plasticman

meanmachine wrote: »

Do you actually have an original thought in your head, or do you only believe what estate agents tell you?

12 months ago the Nationwide insisted 2008 would see zero property inflation.

6 months ago they predicted falls of under 5%

Last month they were predicting falls of around 7/8% this year alone.

Next month, who knows what they'll say.

You do understand that banks and estate agents always talk up the market, no matter what, don't you, or are you just being trollishly naive?!!

A bit harsh MM!!!!

Having said that, I won't be basing my plans on what Nationwide have to say. In response to your comments La Contessa, I'll bet that consumers won't be seen as being "in a stronger position" in a few months when unemployment is leaping up................

tomstickland

The only good news would be that those on fixed rate mortgages could enjoy some loan devaluation.

tradetime

The last 3 cuts were whilst inflation was rising

That's very true, that really should have read "cannot continue to cut..." The BOE has been derelict in it's duty, by playing "jack of all trades" and has failed at both, since it has neither stimulated the economy in any noticeable way, and inflation of course has continued to rise. With CPI forecast to pass 3% this month, and the ECB hinting at rate hikes, and the FED indicating that its easing cycle is at an end I doubt if the BOE can continue to ignore its mandate to the extent of cutting rates.

WTF?_2

tradetime wrote: »

That's very true, that really should have read "cannot continue to cut..." The BOE has been derelict in it's duty, by playing "jack of all trades" and has failed at both, since it has neither stimulated the economy in any noticeable way, and inflation of course has continued to rise. With CPI forecast to pass 3% this month, and the ECB hinting at rate hikes, and the FED indicating that its easing cycle is at an end I doubt if the BOE can continue to ignore its mandate to the extent of cutting rates.

Bottom line is that you can't stave off the inevitable indefinitely.

There's a reason why we don't just have zero percent interest rates and a perpetually blooming economy. The general public are just starting to realise that there are no easy answers I think. Certainly the media have twigged and are trying to break the unpalatable news gradually.

WTF?_2

tomstickland wrote: »

The only good news would be that those on fixed rate mortgages could enjoy some loan devaluation.

Only if they see pay rises. Otherwise, inflation will just make the debts harder to service.

Whilst government and central banks have been (criminally, IMO) remiss in their obligation to properly control interest rates and money supply, you may be sure that they'll be a lot more diligent in suppressing wage rises.